1.1.1 Basis for preparation of financial statements
 
 The financial statements have been prepared under the historical
 convention and as a going concern as per the Generally Accepted
 Accounting Principles and the Provisions of the Companies Act, 1956.
 All income and expenditure having a material bearing on the financial
 statements are recognized on accrual basis.
 
 1.1.2 Revenue recognition
 
 Revenue from software services is recognized on software developed and
 billed to clients as per terms of specific contracts. In the case of
 fixed-price contracts, revenue is recognized based on the work
 completed.
 
 1.1.3 Expenditure
 
 Expenses are accounted on accrual basis.
 
 1.1.4 Fixed assets
 
 Fixed assets are stated at the cost of acquisition, less accumulated
 depreciation. Cost comprises of purchases and attributable cost.
 
 
 1.1.5 Inventory
 
 Inventory is valued at cost and work-in-progress is valued at cost or
 realizable value whichever is less.
 
 1.1.6 Depreciation
 
 Depreciation on fixed assets is provided on pro-rata basis on
 straight-line method at the rates specified in Schedule XIV of the
 Companies Act 1956.
 
 1.1.7 Foreign currency transactions
 
 In the case of sales/services made to clients outside India, income is
 accounted on the basis of the exchange rate as on the date of the
 transaction. Adjustments are made for any variations in the sale
 proceeds on conversion into India currency upon actual receipt. In the
 case of expenditure in foreign currency, the expenses are accounted on
 the basis of exchange rate as on the date of the transaction. In case
 expenses are met out of EEFC accounts, the same is accounted for the
 rate at which the EEFC funds are maintained in the books of account.
 
 1.1.8 Investments
 
 Long-term investments are stated at cost. The short-term investments
 are valued and carried at cost or fair value whichever is lower.
 Provision will be made for decline, other than temporary, in the value
 of investments.
 
 1.1.9 Segment reporting
 
 The company''s sales are basically related to providing software
 services delivered to customers situated at USA. Hence the primary and
 secondary segment reporting is based on the software development
 services to USA only.
 
 1.1.10 Cash Flow Statement
 
 Cash flow statement is prepared to report the cash flows during the
 period classified by operating, investing and financing activities.
 
 1.1.11 Accounting for Taxes
 
 Current income tax expense is determined in accordance with the
 provisions of the Income Tax Act, 1961.  Minimum alternative tax (MAT)
 in accordance with tax laws is recognised as an asset which will be
 adjusted against future income tax liability. Deferred tax expense or
 benefit is recognised on timing differences being the difference
 between taxable income and accounting income that originate in one
 period and are capable of reversal in one or more subsequent period.
 Deferred tax assets and liabilities are measured using the tax rates
 and tax laws that have been enacted or substantively enacted by the
 balance sheet date.
 
 1.1.12 Earnings per share (EPS)
 
 EPS is calculated in accordance with Accounting Standard 20 (AS20) by
 dividing the net profit or loss for the period attributable to equity
 shareholders with the weighted average number of equity shares
 outstanding.
 
 1.2.1 Taxes on Income as per Accounting Standard 22
 
 a)In accordance with the Accounting Standard (AS)22 relating to
 Accounting for Taxes on Income issued by the Institute of Chartered
 Accountants of India, an amount of Rs.6,09,906/- has been recognized as
 Deferred Tax Liability accrued during the year and Rs.3,45,964/- as
 Deferred Tax Liability on time barred carry forward loss. Thus net
 Deferred Tax Liability of Rs.9,55,870/- charged in Profit & Loss
 Account